Houston — Net crude exporter Petroecuador issued a tender to import 30 million barrels of light sweet crude over the course of a year in an attempt to maximize diesel and gasoline production when its Esmeraldas refinery comes back online in the fourth quarter, market sources said Tuesday.
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Petroecuador is seeking 30 million barrels of low sulfur crude oil with an API gravity of 28 degrees to be delivered in a one-year period, according to a tender issued late Monday.
The state-owned oil company is seeking the barrels "in order to optimize the Esmeraldas refinery operations, once the revamping has been complete," the tender said.
Bids for the tender are due Friday.
One trade source called the tender a study to determine if it is economically feasible to import lighter crudes to take advantage of higher runs of diesel and gasoline that lighter crudes will yield at its revamped Esmeraldas, Ecuador, refinery.
The source said that if the tender is awarded, Petroecuador will issue a tender to export the same volume of its own heavy crude. Petroecuador's Oriente crude has an API gravity of 24 and its Napo crude has an API gravity of 19.
Sources said this is the first switch of its kind for Ecuador.
"They are net exporters of crude oil, but someone gave them the idea to make a swap: export Ecuadorean crude and import lighter crudes, since the refinery will be more efficient and capable of reining lighter crudes," one source said. "This will produce more gasoline and diesel, and consequently, they will reduce the volumes of imported products."
Petroecuador's 110,000 b/d Esmeraldas refinery is expected to return to full capacity in the fourth quarter, either in November or December, according to market sources. In late July, Rafeal Poveda, minister for strategic sectors, said the refinery will be back to 100% of its capacity in November.
The improvements, which began in October 2014, include adding a fluid catalytic cracker. The final cost for restoring the facility will be around $1.2 billion, about $300 million more than originally planned, Poveda said earlier this year.
"Before the revamp, the refinery was unable to produce more [gasoline and distillates], even with lighter crudes," one source said. "It is different now. A lighter crude will produce more gasoline and diesel."
The source said that the swap will enable Ecuador to have additional crude to export, which can be used to pay off loans to China.
"I think [Ecuador's loans] are close to $10 billion so far, and with crude worth 50% of what it was last year, it will take longer to pay that debt or they will need more crude to pay it," a source said. "Currently 90% of Ecuadorean crude oil exports go to Petrochina for the debt."